Another Brazilian Ag Group Cuts Soy Production
Ag Rural reduced its Brazilian soybean production estimate to 116.9 MMT as they pointed to blaming extreme heat and a dry spell in southern areas for the smaller projection. Over the last few weeks it has become apparent that unfavorable weather conditions in key growing regions have basically erased chances of another soy production record in Brazil, which reported its largest output on record last year at 119.3 million tonnes. AG Rural is predicting a 4% YoY decline in yields this year even as acreage expanded by 720,000 hectares. With FCStone reducing their estimates to 116 MMT and the USDA still at 122 MMT we look to see if the USDA makes any demand adjustments to the Brazilian balance sheet in the next reported WASDE.
Egypt Purchases Russian Wheat
Yesterday December 9, 2019 Egypt's state grain buyer, the General Authority for Supply Commodities, bought 415,000 tonnes, or 15.3MBU, of Russian wheat in international purchase tender. The delivery periods were for the last week of February and for the first week of March. On a FOB basis, U.S. SRW for the February delivery time was the most competitive but shipping costs Russian and Romanian wheat was more competitive.
What Does This Mean For the U.S. Producer? While the U.S. offer of SRW was so low it can be classified as a statistical outlier, it appears that U.S. wheat is becoming become more competitive in the world export grid. This could to help direct future business away from the black sea region and to the U.S.
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